Changing leadership will not cure the VA

Department of Veterans Affairs (VA) Secretary Eric Shinseki’s resignation will not solve the crisis in the VA health system. Veterans have had trouble accessing the healthcare they need for decades — and over many changes in agency leadership. We need to open the system to competition. Let veterans, not bureaucrats, decide how they get their healthcare.

The VA’s inspector general reported last week that 1,700 veterans in the Phoenix area who were waiting for a primary care appointment were not even included on the electronic wait list. Veterans waited 115 days on average for their first primary care appointment

{mosads}Today’s problems are not new. They go back at least as far as the early 1970s, when the VA was seeing an influx of Vietnam veterans with serious war-related injuries. Failure to recognize exposure to Agent Orange as a cause of serious health conditions stirred public protest over inadequate care. Then, as now, the VA head resigned, but the system did not change.

The VA has gotten away with a long history of failures because its customers have no other choice. Veterans can take the product offered by the VA at no cost or pay the full cost of competitively supplied alternatives available in the private market. Not surprisingly, few veterans decline the free alternative even though that care may be poor quality, manned by indifferent staff, supplied in clinically unsanitary surroundings and expose the patients to riskier conditions than they would choose if they were paying the full cost themselves.

Policymakers can’t claim they weren’t warned. The 1975 study of VA hospitals written by one of us (Lindsay) explained that when services are provided by the government at a far lower cost than unsubsidized private firms can afford, the beneficiaries of these services are in a take-it-or-leave-it situation. Valuable quality control otherwise exercised by the threat that consumers might choose another provider is lost.

That leaves it up to the program’s administrators to exercise quality control themselves while attempting to produce the service at the lowest cost. With limited budgets and growing demands, this is a cruel trade-off. Cutting costs will eventually depreciate the quality of the product.

Sadly, such reductions in quality are less apparent to administrators than reductions in cost. The anti-quality bias cannot be rectified efficiently given this basic institutional bias. New compensation schemes that capture only the most superficial aspects of quality, or noisy investigations of bureau management that regularly result in dismissals, cannot solve the problem.

This same quality control blindness affects Congress as well. Congress is cost-conscious and seeks to maintain or improve health quality. But given the objectives of producing care efficiently and preventing graft and misappropriations, they choose to give up what they cannot monitor anyway.

The only way to reform VA healthcare effectively is to restore the patients to the role of allocator of healthcare resources. Let them choose from among competing providers who offer various combinations of price and quality. 

Just as shoppers have different preferences for the style, durability and warmth of overcoats, veterans have different preferences for access, quality and cost of care. Consumers lack information on hospital performance and quality, but independent rating services like Consumer Reports can help fill in those gaps, just as they help assess the durability of a coat hanging on the rack. Rather than attempting to operate a separate government hospital system, the VA could focus on filling the gaps in consumer information on quality and performance — which would benefit veterans and nonveterans alike.

The temptation is to fire more VA administrators and tighten administrative controls. That ignores the fact that the falsified wait lists and poor service are a direct response to the administrative controls already in place. Letting veterans have a voice in the care they receive — and giving them the chance to take their business elsewhere — is the key to meeting the nation’s obligation to our veterans.

Antos is the Wilson H. Taylor scholar in healthcare and retirement policy at the American Enterprise Institute. Lindsay is professor of economics emeritus at Clemson University.